International News
Uber Technologies Inc. has generated billions of dollars from the labor of its drivers without the expense of treating them as employees. California is poised to disrupt that business model, and the ride-hailing behemoth is gearing up for a legal fight.Lawmakers in the state want to reclassify workers treated as independent contractors, which may dramatically boost costs for Uber and other companies built around the gig economy. Under Assembly Bill 5, which has cleared both houses of the California Legislature, many workers would be entitled to a minimum wage, mileage reimbursement and workers compensation.
Proponents say the bill, which has the support of Governor Gavin Newsom, will bring a groundbreaking shift to finally give workers their due. Uber and its allies say that if the bill becomes law, it may not meaningfully change the business model because there are still questions about which workers qualify.
“AB 5 doesn’t all of a sudden -- magic wand -- change everybody’s status to employee,” said Tony West, Uber’s general counsel. Instead, new criteria would be used to determine whether workers are employees or contractors, he said. “Now, whether or not we win under that test in California remains to be seen,” West said.
Skeptics say Uber may be too optimistic. While it’s used arbitration, litigation and settlements to thwart drivers’ attempts so far to be classified as employees, AB 5 could pose a significant risk to the company, especially if similar measures are adopted in other parts of the US, legal experts, academics and financial analysts say.Uber is “whistling past the graveyard” if it underestimates how much AB 5 would favor drivers, said Jason Lohr, an employment lawyer in Uber’s hometown of San Francisco...Read More
